Jemma Mouland, Deputy Director for Ageism and Inequality at Centre for Ageing Better, got in touch to discuss some of the age-based rules that remain embedded in pension and insurance regulation. This post sets out the key points from that conversation.
Two recent policy changes signal that age should not determine participation in working life. Removing the default retirement age in 2011 established that age doesn’t determine a natural endpoint for employment. The abolition of the lifetime allowance in 2024 removed one of the main reasons age 75 carried tax significance. Yet pension and insurance regulations still contain rules that treat age as a determinant of eligibility:
- Death in service cannot cover employees aged 75 and over, because group life schemes are regulated as pension schemes and require any payout to be made before age 75;
- tax relief on pension contributions stops at age 75;
- automatic enrolment does not apply to those aged 75 or over; and,
- some schemes do not accept contributions from this group at all.
These rules were designed when age-based conditions were standard across the labour market. That approach is now out of step with the direction of policy travel and employment trends. The number of people aged 65 and over in employment tripled between 2000 and 2023, reaching 1.4 million (Centre for Ageing Better), and the employment rate for this group continues to rise.
The practical impact at present is limited. In 2018/19, around 528,000 people in employment were aged 70 or over, representing 1.6% of all workers (ONS). Almost half of workers aged 70 to 79 are self-employed, and death in service rules don’t apply to them, so the directly affected population is a small subset of an already small group.
These regulatory anomalies will affect more people as currently younger cohorts age, but whether that justifies reform now or later is not straightforward. There are many regulations that reflect outdated assumptions, and prioritising which to address requires judgement about current and future impact and the cost of change.
The real issue is about what regulation signals. A framework that removes compulsory retirement ages while retaining caps on employer benefits and pension saving sends mixed signals to employers and workers about what is expected and valued. Whether that justifies legislative time now is a legitimate question; what is harder to justify is leaving it unasked.
Pensions Goth
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